Open Services Innovation

In his blog, Irving Wladawsky-Berger discusses some of the issues raised in Henry Chesbrough’s book, Open Services Innovation. He notes that Chesbrough’s key argument for the importance of services innovation is the serious competitive challenge faced by many product companies, which he calls the commodity trap, whichis the result of three key business forces: Manufacturing and business process knowledge and insights are widely distributed. It is getting harder for companies to differentiate their products and sustain that differentiation over time. Manufacturing of products is moving to areas of the world with very low costs. The amount of time a product lasts in the market before a new and improved one takes its place is shrinking. As a result, even successful products can expect to enjoy an advantage in the market for a shorter time than in the past.